Discuss my NY Times op-ed here

December 16, 2011

Since the NY Times didn’t provide a place for comments in the article itself, I thought I should provide some space (as a public good :) The article did provide a link to the published paper, but those who can’t get through the pay-wall may prefer the working paper version (from 2009, so it’s not the same as the published version). FYI, here are some comments from Greg Mankiw and Steve Landsburg (plus an exchange I had with Landsburg).

PS. Of course, unless and until somebody puts a comment here I’m left with the tentative conclusion that maybe this particular public good is non-rival because nobody demands it!!

Update Dec 17 5pm: Oh good, some comments :) And here are some older comments on the working paper when I posted it back in 2009.

Update Dec 18 8am: Based on comments so far (plus emails I received and will post anonymously below) I think I have four observations:

1) Regarding our “story”: The job of an academic paper like this is to tell a “story” about some data. We’re not claiming that it’s The Only Possible Truth, just that it’s one plausible story. And ideally our story should be viewed in the context of previous stories, i.e., previous research in this area. (That’s why academic papers often begin with a literature review.) The previous literature in our area includes all sorts of analysis, from public goods experiments-by-mail (Marwell and Ames 1981; similar experiments are now done by email, see e.g., Rubinstein 2006) to a look at “cheating” on dues-payments to professional associations (Laband and Beil 1999) to a “letter drop experiment” in which fully-addressed envelopes containing cash were left in college classrooms to see whether the ones left in economics classes were more or less likely to reach their intended destination (Yezer et al. 1996). Most of these previous studies (but not all of them) lend weight to our one-sentence lit review in the NYT: “Academic research suggests that there’s a good deal of truth to the stereotype.”

2) Regarding our statistical work: Obviously we cannot explain it all in 700-word NY Times article, so I encourage you to read the working paper version (linked above). It’s worth noting that the paper passed peer-review, meaning that the statistical work should not be dismissed off-hand. My co-author Elaina Rose and I were very careful in trying to focus solely on the effects of economics classes on giving behavior. Of course, our article is only one story about one data set, but I think it’s a reasonable story with a solid analysis of an interesting data set. Again, we had a one-sentence summary in the NYT: “Although students remained anonymous, we could look at all of the 8,743 members of our data set and determine what their majors were, when they took economics classes (if at all) and whether or not they donated to ATN or WashPIRG during each quarter of our study period.” (Incidentally we also knew age, race, and gender, so our analysis took those into account too.)

3) Regarding the nature of public goods: Some comments express doubts about whether WashPIRG and ATN count as public goods. This is definitely fair for WashPIRG but less so for ATN. And, again, it’s worth looking at our research in the context of the previous literature. Frey and Meier (2004) look at a nearly identical situation at the University of Zurich, where students are asked if they want to contribute to scholarship funds for needy students and for foreign students; almost 60% of students donate (!) and again economists donate less than the rest. Perhaps you want to argue that these scholarship funds are also not public goods, or perhaps you want to argue that “all taxation is theft” and therefore that there is a fundamental flaw in all public goods experiments. I stand by the claim in the NYT article that all this is “mostly beside the point. Regardless of the groups’ actual social value, a purely self-interested individual would choose to free-ride rather than contribute.”

4) Regarding politics &etc: Politics comes to the fore surprisingly quickly in many comments, and arguably I started it by closing the NYT piece with the claim that “Our research suggests that economics education could do a better job of providing balance.” Perhaps an economist with an even greater respect for free markets than me would have told a different story (“Look at how economics education is getting students to stop wasting their money on worthless causes!”) but I would like to at least note that if our statistical analysis had come out differently—if we had found that economists give more than others and that taking economics classes increased giving—then we would have still been excited to publish our work. In other words, we didn’t go into this trying to tell a political story; we went into this trying to see what we could learn from a cool data set, and that was the main driver of the whole effort.

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21 responses to “Discuss my NY Times op-ed here”

‘One interpretation of these results is that students who were not economics majors suffered a “loss of innocence” after taking an economics class, presumably because of exposure to certain ideas (like the invisible hand) or certain people (like economics teachers).’
Does the walk-out-of-Mankiw-class make little more sense now?

Congratulations on a well-written and well-placed article! However, I don’t buy your basic conclusions.

For starters, you offering a place to comment is not really a “public good;” it is a way for you to promote your own work and career (as it should be). Likewise, my commenting is intended to help spread the right ideas, yes, but also to promote my own work at http://blog.ariarmstrong.com/

Of course it matters very much whether the two funded groups — WashPIRG and ATN — provide a “public good.” In my view, both of these left-wing groups actually provide a public harm. Economics majors are more likely to be more conservative or free-market-leaning in their views, and thus they are more likely to agree with me that the groups in question do not provide a “public good.” If you don’t expect to benefit from something (but in fact expect to suffer harm because of it), then declining to contribute funds to it hardly makes one a “free rider.”

The alternative explanation to your “loss of innocence” explanation is that, as they matured, more students realized that the groups in question were not worth funding.

Of course, this does not disprove your basic thesis, that people who learn economics tend to be “free riders” more often. I think it’s quite possible to get trapped in the “economic man” model — which really is an error within economics — and because of that to free ride more as a matter of ideological commitment. The error with that is to see financial or material interests as the sum of one’s legitimate interests; anyone who takes into account the actual human being realizes that it hardly the case.

But figuring that out has nothing to do with “learning about the shortcomings… of free markets,” as you suggest; rather it comes from learning about the nature of human beings. Your slight of free markets is gratuitous.

Still, it’s an interesting article, and one worth contemplating.

-Ari Armstrong

[YB: Thanks for the kind words and thoughtful comments.

* I think it's easy to say that WashPIRG is a left-wing group, but it's less easy to reach that conclusion about ATN. In any case, as noted in the paper itself there is considerable evidence from elsewhere that economists are more likely to free-ride.

* As for the conclusion, well, I agree that your interpretation (that students just get smarter about not giving money to bad causes) is also possible, although again I think this is harder to argue for ATN than for WashPIRG. In any case, I can quote from the last paragraph of the journal article itself: "The interpretation of these results – in particular whether lower donation rates are a sign of “selfish” behavior – also depends in part on whether the requested donations are public goods. ATN is arguably a pure public good within the student body because the aim is to distribute resources to students from outside groups. Our results here echo Marwell and Ames (1981): economics students are more likely to free-ride. It is not so clear that WashPIRG provides a similar public good because the organization’s agenda extends beyond the interests of the student body. Indeed, it is possible in this case – as in, say, a requested donation for an organization dedicated to replacing competitive markets with economy-wide price controls – that economics training would reduce donation rates not because students become more selfish but because they become more educated. Regardless of the cause, however, it is clear that economics training changes the giving behavior of non-majors."

I was shocked by how poorly designed the experiment seemed (albeit based solely on reading the op-ed), and how similarly divorced from the actual facts was the conclusion. You quickly dismiss the ideological nature of the organizations, and so failed to address at all the possible ideological explanations for the distribution of student donations.

Even without making it obvious that “Affordable Tuition Now” is probably left-wing group, it is clear to those of us who pay attention that such groups are more likely to pursue policies which compound the problem of high tuition, rather than address the root problems (government subsidies). Some of us are also aware that while the cost of college education has increased, the financial benefits of earning a degree have grown at an even faster rate. It is thus irresponsible to assume that a failure to support organizations that you agree with is proof of selfish behavior on the part of others, instead of alternative evaluations of the usefulness of the organization and its purpose.

I would never give to such groups, even if I was wealthy enough to supply their entire budget (where there would be no question of free-riding). I cannot say the same about groups that would, for instance, fight to limit government involvement in education, or encourage universities to focus on the one kind of diversity that should truly matter to them – diversity of ideas. I would happily give such groups $3, even knowing that my single donation makes no difference. Yet by your flawed test and logic, I am evidence of selfish behavior, and even more paradoxically, a failing in the economics curriculum (a complaint I just found weird, as it seems to me that market failure is well-trodden ground in economics classes).

I forgot to add a crucial point to my argument, which is that the ideological make-up of economics students is not likely to mirror that of the entire student population. Ari provided more on this before me.

Also, I like your comedy.

[YB: Thanks for your kind words and your thoughts on the paper. But please note that our crucial contribution to the literature was comparing students before and after they took economics. So their ideological make-up is not likely to be a huge factor here (although of course it is possible that an economics class will play a role). As for your being "shocked by how poorly designed the experiment seemed (albeit based solely on reading the op-ed)", you could go read the paper (or the working paper, both linked above). But I will note that the conclusion that you and Ari lean towards---that student giving is changed by their views on "the usefulness of the organization and its purpose"---is in an important way unknowable and untestable. It reminds me of the argument about whether or not people are "selfish": you can always argue that philanthropists (say) give money away because it makes them feel better. Ultimately this kind of discussion doesn't go anywhere IMHO. Instead of throwing up our hands, I think it makes more sense to take a critical look and conclude that an organization dedicated to reducing student tuition fees is in fact a public good from the perspective of the students.]

one always hesitates to challenge a reedie for several reasons, but I’m left a bit bothered by the Times piece and what it purports to prove, if anything. I don’t have the expertise to explain regression analysis, but am told it allows one to separate out various influences in such cases to see which one is the perp. don’t see that here. have we a balance among richer/poorer, gender or even time sequence or maybe, dare I say it, race. perhaps the article is it derived from answered these questions, but the times piece seems simultaneously edgy and very thin. if the students of economics were, for instance, typically significantly richer or poorer than the others, that could be a better explanation. you’re doing what a provocative economist has got to do (fish gotta swim, birds gotta…), but it is harder to explain why the Times would publish such drivel.

[YB: As noted above, our crucial contribution to the literature was comparing students before and after they took economics. So gender/income/race/etc will wash out.]

about economists and selfishness: I think most intellectual effort goes into justifying decisions we have already made on irrational bases. People who study economics get intellectual arguments supporting the intrinsic selfishness that is part (not all) of each of us. Your survey results could also be interpreted as people who have given before, and seen no benefit, or have less money, stop donating.

Comment #2

I enjoyed your article in the NY times today. It reminded me of my first formal economics class. I didn’t lose my innocence there but found there a profound intellectual innocence in the discipline of economics.

In the early 1980s I sat in a micro-economics class and thought what I was listening too was missing the point. I wrote in my notes that the point of political economy is as follows:
1. Motivating people to engage in productive activity. This can be done by:
a. Driving them with coercion and fear
b. Enticing them with rewards and hope
2. Ensuring they produce something useful resulting in an increase not a decrease in total resources. This is the heart of management.
3. Seeing that what is produced is actually needed. This is best done individually by the free market (when you can find one) and by government when collective action is necessary.
4. Distributing the increase in resources thus achieved so that product activity will continue. If you motivate by enticement the deal must seem fair, if by coercion … keep doubling the guard.

It seems to me that so much of what passes for economic thought proceeds in ignorance of these principles. For instance, the current fashion for addressing a slowing of economic activity with austerity alone violates the first principle above. The disproportionate growth of financial services within our economies seems to violate the 2nd principle more than it supports the 3rd one. The extreme concentration of wealth in a small proportion of economic actors violates the 4th principle by violating the marble rule. When one boy has all the marbles the game stops. We consume to live, the game must not stop.

Of late we have been hearing of something seemingly new, behavioral economics. If this is new then economics has been a foolish academic game since Smith. It has always been all about behavior, usually irrational. Ask any successful merchandiser.

Comment #3

I read with great interest your description of the study conducted with Elaina Rose at U. Washington. The
article, incidentally was very well written, and raised several questions in my mind.

First and foremost, I assume conditions are much the same as when I attended college in the sixties; the
distribution of economic conditions in which students find themselves is roughly proportional to or perhaps
only slightly above the nation as a whole. I cannot help but feel that an important but neglected factor in your
study was any correlation between the students’ wealth and their demonstrated propensities to “give.”

In spite of the fact that the donations were minimal, I suspect that the “giving” behavior may well have been
as much the result of overall frugal behavior (for survival) as a tendency toward selfishness. My suggestion is based upon personal experience; while attending college, I had to watch every penny, but once I found employment which provided sufficient income I never had any problem contributing to charities, public libraries, children’s hospitals, and even individuals in need.

Comment #4

Regarding “The Dismal Education,” why did you pick two leftist groups? This seems like a strong foundation for inaccurate results.

Comment #5

I don’t understand your study. If Econ majors tend to skew republican, wouldn’t that make them less likely to donate to a PIRG?

Yoram, your suggestion that ATN is somehow a public good seems just laughable. How can redistributing income to college students be a public good?

You might consider it such, I suppose, if you thought that the recipients were getting a free lunch. But not if you realized that *somebody else is paying for that lunch*. Why is it more altruistic to care about students than to care about taxpayers?

One might as well say that white students reveal their selfishness when they fail to contribute to groups that would redistribute income from blacks to whites, or that male students reveal their selfishness when they fail to contribute to groups that seek to oppress women for the benefit of men. I’d prefer to say that those students who *support* these causes reveal their selfishness by putting all the weight on people who happen to resemble themselves, and ignoring costs to anyone who happens to be a little bit different.

Steve Landsburg is being too kind, Yoram simply doesn’t understand what a public good is. The definition comes from Paul Samuelson’s 1954 AER article; private goods are rival and excludable in consumption, public goods are neither.

An over the air radio broadcast is a public good because one person can listen or ten million can listen without interfering with each others enjoyment. Nor can the broadcaster exclude anyone from listening who is in the vicinity of the transmission tower.

Neither of Yoram’s examples–WashPIRG and the tuition group–meet this test. And, no one who doesn’t understand this elementary concept should be teaching economics.

[YB: Perhaps you should clarify: are efforts to reduce pollution (or to reduce tuition fees) rival or excludable or both?]

Wow, the intellectual confusion is truly deep. Tuition fees aren’t ‘a good’, they are prices of goods; the right to attend classes. Classes which are private goods, as they are clearly both rival and excludable; only a limited number of students can fit into a classroom (even a large one), and there is a door to the classroom.

An entrepreneurial teacher could ‘reduce tuition fees’ by starting a competing school and offering classes at lower prices. I.e. offer the same private good at a lower price.

Speaking personally, Yoram’s drive-by mischaracterizations do no inspire me to read his book.

He complained that no-one addressed his points. I listed people who did. He misrepresents Steve’s (brilliant) counter-example. He suggests that when Steve provides such a counter-example Steve is in fact dodging the issue!

“Putting all your sheep in the village commons causes a negative externality. Does that mean the commons does not provide a public good?” This is a non sequitur. The common itself is a public good. The process of grazing my sheep on it is not a public good, and is not the same thing as the common.

Of course water is a private good. If I pump all the water from the lake you live on to create my own lake elsewhere, you can’t simultaneously use that water to buoy your floating home. That’s what makes water rivalrous in consumption and therefore not a public good.

Look at it one step removed. Yoram is not saying tuition fees or pollution are public goods. He’s saying efforts to reduce those things are public goods (at least among the student population). Every student benefits from a campaign to reduce tuition without interfering with each other (non-rivalrous). No one can stop students that don’t contribute to the cause from benefitting if the campaign succeeds. (non-excludable).

As someone else pointed out, even the water floating your houseboat is a private good. I disagree with Ken B about the commons being a public good; the grazing of sheep on it is rivalrous–there’s a limit to how many sheep can do so. And, obviously it is excludable if you build a fence around it.

Which leaves ‘the air’, which exists independently. Mankind doesn’t provide it at all. A sufficiently clever student of economics could model a public good here–selfish bastards!–but, I’m not going to do the heavy lifting for you.

AngryKrugman (isn’t that redundant?),

You’re closer than Yoram (who has admitted that PIRG isn’t a public good), but I don’t think you’re right that ‘Every student benefits from a campaign to reduce tuition without interfering with each other (non-rivalrous).’

Not all students pay the same tuition, for one. Think of tuition as a list price. Out of state students pay full list, in-staters get a discount off list. Further discounts are available; various financial aid programs.

I can certainly imagine an entrepreneur offering his services to students to get them some form of financial aid. I once knew someone who wrote grant proposals and took a cut when he was successful.

I gave Yoram the example of an over the air radio broadcast. Entrepreneurs overcame the public goods aspect by using the broadcast as the raw material for the creation of a rivalrous, excludable good; the listening audience that could be sold to advertisers.

Of course, if tuition is lowered that may not actually the cost of providing education. It may well shift that cost onto taxpayers, some of whom are students enjoying(?) lower tuition.

It doesn’t surprise me that econ majors would be better positioned to appreciate these factors. I.e., they’re better at cost/benefit analysis than university students as a whole. Isn’t that a more realistic assumption than selfishness?

I’m really unclear on your argument. What does the private entrepreneur offering potential grant writing services or the fact the pay different tuitions have to do with whether or not it’s a public good? Some people enjoy radio more than others. An entrepreneur could create a satellite radio station that only some use. Neither have anything to do with whether radio broadcasts are non-rivalrous or excludable. How is that any different from a group that supports a broad message that says tuition should be lowered. Again, Yoram is not saying the act of lowering tuition is a public good. He’s saying the act of campaigning for lower tuition rates is a public good.

AK, I’m arguing that while rivalry and excludability are necessary, they aren’t sufficient to support the idea that the good has to be provided collectively. And certainly a belief that they don’t is not evidence of selfishness.

I got involved in this debate over at Landsburg’s blog when Yoram said,

‘Frey and Meier (2004) look at a nearly identical situation at the University of Zurich, where students are asked if they want to contribute to scholarship funds for needy students and for foreign students; almost 60% of students donate (!) and again economists donate less than the rest. Perhaps you want to argue that these scholarship funds are also not public goods….’